Last updated: July 2026 · Reviewed by John Pierre Saliba, Director and Mortgage Broker, MFAA Accredited
Using Home Equity to Buy Shares
Accessing home equity to invest in shares is a legitimate strategy, but it's more complex than using equity for property. Lender acceptance varies, the risk profile is higher (shares are more volatile than property), and the tax treatment requires careful structuring. This guide explains how it works, what lenders allow, and what to consider before proceeding.
I approach equity-for-shares requests carefully. The strategy works well for disciplined investors with a clear plan, a diversified portfolio, a long time horizon, and the ability to service the loan if share values drop. It works very badly for anyone who's speculative about the outcome or who would be forced to sell shares at a loss to service the loan. I always run a stress test before recommending this approach.
Lender Policies on Share Investment Purpose
Not all lenders accept share investment as a purpose for equity release. Policies range from:
- Mainstream lenders (major banks): Generally accept share investment as an equity purpose, particularly for blue-chip or diversified portfolios. May ask for details of intended investment.
- Non-bank lenders: Policies vary, some accept freely, others restrict to property investment or specific asset types.
- Restrictions: Cryptocurrency purchases are rejected by most mainstream lenders. Highly speculative or margin lending combinations raise flags.
We identify lenders whose policies align with your intended investment and structure the purpose correctly in the application.
Tax Deductibility, The Rules
Interest on an equity loan used to buy income-producing shares (shares that pay dividends) is generally tax-deductible. Key requirements:
- Shares must be purchased with the genuine intent to earn income (dividends)
- The equity loan must be kept in a separate account, no personal expenses
- Shares must actually be dividend-paying (growth-only shares without dividends create a risk that deductibility is denied)
- Confirm with your accountant before proceeding, the ATO's rules here are nuanced
The Risk Equation
Property equity + share market exposure creates a compounded risk position:
- If share values drop, you still owe the equity loan, the loan is secured against your home, not the shares
- If you can't service the loan, your home (not the shares) is at risk
- Unlike margin loans, there are no margin calls, but there's also no forced sale discipline
- Concentration risk: investing equity in a single company or sector amplifies the downside
This strategy suits investors with: stable employment income, ability to service the loan independently of share performance, a diversified portfolio approach, and a 5–10+ year investment horizon.
Worked Example
- Home equity accessed: $150,000 at 6.49% IO
- Monthly interest cost: $811
- Invested in diversified ETF (3.5% dividend yield): $5,250/year dividends
- Annual interest cost: $9,735
- Net annual cost before tax: $4,485
- Tax deduction (interest) at 37% bracket: $3,602 saving
- Net after-tax cost: ~$883/year
- Required capital gain to break even: ~0.6% annual growth on $150K
